You have decided to buy an existing business in Ukraine after 24th February 2022 full-scale invasion
Over the past year and a half, the business environment in Ukraine has significantly changed. Some businesses went bankrupt, others reformatted, found new opportunities and expanded their business. The main point is to objectively assess all the changes happening, analyze their consequences, and move forward.
This is the time when it is possible either to sell your business and start doing something completely new, or to try to buy an existing profitable business the owners of which have decided to change the sphere or have chosen another market for their further development. It goes without saying that buying a business is your own risk and responsibility, so make sure that everything has been calculated and the benefit is obvious for you.
In this article, we will partially consider the benefits and relevance of buying a finished business during the war. We will discuss:
- The benefits of buying a finished business
- How to get prepared for the purchase
- What needs to be paid special attention to
Our aim is to provide you with the information that may draw your attention to some key aspects of this complicated operation, which will prevent or reduce the risks of significant losses in the future.
Before the full-scale invasion to buy a business, it was enough to conduct legal and tax due diligence and audit financial statements to get a sufficiently integral picture.
To launch your own business, you need resources, such as money, free time, and motivation. Here, competencies are also worth mentioning, which you either need to have or develop, as it is pretty complicated to develop a successful business without certain knowledge, skills, and the ability to use them.
When buying an existing business you are relieved of many issues, like:
- Client Base. An existing business has clients and buyers of goods and services. Perhaps, there are also prospects for rapid extension of the client base and, consequently, for an increase in sales.
- Established business processes. Having bought a finished business, the new owner will be able to immediately use proven and effective ways of working, operational and management processes. Probably, there will be certain corrections, but in most cases, it is definitely much easier than creating the business from scratch.
- Brand. If the former owners of the business managed to develop a positive reputation for the brand, then it is rather a valuable asset.
- Personnel asset. An existing business has its staff, so you do not need to form a team.
Moreover, businesses may be sold with their property (trademark rights, realty and premises, vehicles, equipment, etc.), which is also rather beneficial.
The current situation regarding buying and selling businesses on the market in Ukraine
Supply and Demand in 2023
In 2023 in Ukraine, both unprofitable projects and successful businesses are sold.
Concerning the latter, there are numerous reasons. For instance, an entrepreneur is involved in a couple of businesses and loses interest in one of them. Or he/she decides to concentrate on another business. Or they lack investment for an additional business which is generally successful but less promising for them personally. Therefore, you should not look for a trick in all the offers on the market. However, you certainly must check and analyze everything.
Steps to buy a finished business
Identify and outline your interests
You need to find out which field is the most interesting for you, what knowledge and skills you need to run business in the chosen sphere, whether your competencies and experience are enough to do such business.
Create long-term and short-term goals
If you do not have exact goals, it is rather difficult to develop a business, even an existing one. You need to specify your personal goals (financial independence, increase in income, creation of a strong and well-known brand) and combine them with business opportunities in the sphere interesting to you. Perhaps, you should make a plan for profitability and achievements for the coming periods.
Analyze the market
Study the market tendencies, analyze your rivals and prospects for growing in the chosen sphere and in the region where your business will work. The finished business should be in demand and able to develop.
Assess financial opportunities
Besides having money to buy the business, you will also need money further to maintain the operation of a business and its development.
You can consult with specialists, such as financial advisors, brokers and lawyers, on the relevance of buying this or that business
Assessment of the current state of the finished business: finances, liabilities, prospects
If you have found an appropriate finished business, then comes the most important stage, which is the assessment of financial and legal aspects.
Here is the list of the main steps you need to take before buying a business:
- Verification of legal documents. Make sure that founding and registration documents, contracts with clients and counterparties, licenses, permits and other business-related documents are available, and in order, and meet the requirements of current legislation.
- Check the registration data about the company in the Unified State Register. You can obtain the information free online or you can order an extract (then you will have to pay a fee) from the registry using an electronic signature.
- Analysis of financial statements for several recent periods (balance sheets, profit and loss statements, cash flow statements). Special attention should be paid to such indexes as income, expenses, profitability, and net profit.
- Client Base Analysis. It is important to know the target audience, customer level, and average check.
- Competitors analysis. Try to find the closest competitors, and assess the level of competition and competitiveness of the business you are going to buy.
- Analysis of assets and liabilities. Find out the state of things with realty, equipment, warehouse stock, and debts. The information on ownership of real estate, and land plots can be checked in the State Register of Property Rights to Immovable Property on your own using the electronic signature or you may order a check from a notary public.
- Check existing court cases, where the company is a participant in the trial, using the search in the Unified Register of Court Records.
- Analysis of current and potential demand. Find out the level of demand now, and estimate the prospects of growth, for instance, whether it is possible to expand the business and client base, launch manufacturing of new products, or enter new markets.
- Analysis of personnel assets. Assess the team, personnel qualifications, and resources used at work.
- Inspection of premises. It is important to make sure that production and warehouse areas, offices and other premises do not need major repairs, which will require serious additional costs
We provide services for legal support of the process of buying a finished business in Ukraine during the war. We can help you prepare all legal documents.
At the stage of establishing, it is important to support new businesses with modern digital products, which help optimize key processes. Not all digital services need big investment from the business. Try to choose digital services from a proven provider and develop a new business trying to be ahead of competitors.
We will outline the ways to make calculations, transfer and receive money when buying or selling the business in our articles further.
